The average annual electricity consumption for a single-family house is 5000 kWh with the cost per hour extracted from their bill to be $0.17/h. you suggested a PV system that will reduce the consumption to 25% of the original consumption. The system will have initial cost after all incentives of $9,000 with zero salvage value at the end of the service life. Using 25 years analysis period and 3% interest rate, find the following for the 75% saving resulted from the new system. Use the attached excel sheet for your calculations. 1. Present worth 2. Simple payback 3. Discounted payback using the 3% rate 4. Internal rate of return

The average annual electricity consumption for a single-family house is 5000 kWh with the cost per hour extracted from their bill to be $0.17/h. you suggested a PV system that will reduce the consumption to 25% of the original consumption. The system will have initial cost after all incentives of $9,000 with zero salvage value at the end of the service life. Using 25 years analysis period and 3% interest rate, find the following for the 75% saving resulted from the new system. Use the attached excel sheet for your calculations. 1. Present worth 2. Simple payback 3. Discounted payback using the 3% rate 4. Internal rate of return

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Use Annual Worth method to calculate the benefit/cost ratio at i = 6% for a new library. The first cost is $500K, and O&M costs are $100K per year. There is no salvage value after 30 years. Community benefits are estimated to be $130K per year. Is the library economically justified? Write a brief interpretation of your answer
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Q1. A farmer is planning on installing a 30-kW solar PV system equipped with 10kWh electricity storage (batteries). The cost of installation of the panels with inverter is assumed 1 $/W and the electricity storage costs 750 $/kWh. Given various efficiencies, let us assume that the system with batteries provides a constant 5 kW in average year around (a crude assumption, but OK for our purpose). The batteries need replacement every 5 years and the system has a salvage value of $5,000 at the end of its life (25 years). With this system installed the farmer saves the hydro cost that can be assumed 0.18 $/kWh. Assuming a MARR of 8%, calculate the NPV of this investment using two approaches: a) a simple payback approach, b) discounted cash flow analysis.
A mechanical workshop invested in purchasing a semiautomatic machine for $50,000, that expected to generate a net income of $8,000 starting year 4 and expected to decrease by 5% per year thereafter. The useful life of the machine is 20 years. If the workshop's minimum attractive rate of return (MARR) is 10% per year, the standard notation for determining the discounted payback period is: O 0 = -50,000 + 8,000 (P/A, 5%, 10%, np - 3) (P/F, 10%, 3) O 0= -50,000 + 8,000 (P/A, 5%, 10%, np) O 0 = -50,000 + 8,000 (P/A, -5%, 10%, np - 4) (P/F, 10%, 4) O 0= -50,000 + 8,000 (P/A, 5%, 10%, np - 4) (P/F, 10%, 4) O 0= -50,000 + 8,000 (P/A, -5%, 10%, np) (P/F, 10%, 4) None of them O 0 = -50,000 + 8,000 (P/A, -5%, 10%, np - 3) (P/F, 10%, 3) O 0= -50,000 + 8,000 (P/A, -59%, 10%, np) (P/F, 10%, 3)
Two 100 horsepower motors are being considered for use: If power costs $0.10 per kWh, and if the interest rate is 12%, how many hours of operation per year is required to justify the purchase of XYZ brand motor? (1 hp = 0.746 kW). Which motor would you select if the motor is expected to operate 2,000 hours per year? Explain why.
Elijah Enterprises will need to upgrade the computer system in 4 years. They anticipate the upgrade to cost $105,300. If the discount rate is 13%, what will be the required yearly investment needed to obtain the money for the upgrade?Round your (1+R)^n value to 2 decimal places and use that number for your final amount required rounded to the nearest dollar. Future Value / (1+R)^n = Amount Required / = What would be required if the discount rate was 8%? Future Value / (1+R)^n = Amount Required / =
A large standby electricity generator in a hospital operating room has a first cost of $67,250 and may be used for a maximum of 6 years. Its salvage value, which decreases by 15% per year, is described by the equation S = 67,250(1 − 0.15)n, where n is the number of years after purchase. The operating cost of the generator will be constant at $9,000 per year, and the interest rate is 12% per year. Determine the economic service life and associated AW values. The economic service life is 6 years and the AW value is $−__.
Please solve by hand or using formulas
A solar panels are used to warm the water fed to a home. The solar panels have an installedcost of $2,500, and they reduce the homeowner’s energy bill by $50 per month. Theresidual value of the solar panels is negligible at the end of their 5-year life.What is the annual effective IRR of this investment?
Elijah Enterprises will need to upgrade the computer system in 5 years. They anticipate the upgrade to cost $98,900. If the discount rate is 15%, what will be the required yearly investment needed to obtain the money for the upgrade?Round your (1+R)^n value to 2 decimal places and use that number for your final amount required rounded to the nearest dollar.
A "standard" model of a dozer costs $20,000 and has an annual operating expense of $450. The dozer will be replaced in 6 years when the salvage value is expected to be $2,000. A "super" model can be purchased for $25,000, but will have a salvage value of $7,000 when retired in 6 years. Its operating expenses are also $450 a year. The purchaser's other investment opportunities are 5%. Compare these alternatives by using the annual equivalent method.
3. A shop installs an oil collection system to reduce waste. The collector installed has an initial cost of $2,500 and results in annual savings of $500. If the expected lifetime of the collector is 5 years and the relevant annual interest rate is 10%, what is most nearly the Net Present Value of this system? (Hint: NPV = PV of Cash In - PV of Cash Out)

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